The deregulation winds blowing through Washington could add $27 billion of gross profit at the six largest U.S. banks, lifting their annual pretax income by about 20%.American Banker
Big U.S. banks could see profit jump 20% with deregulation
Bloomberg
Imo this article greatly understates the issue...
ReplyDeleteExplain more.
ReplyDeleteThey have perhaps 100s of $B of regulatory capital that they have had to build over the last 8 years in order to accommodate Fed policy of creating $Ts of non risk bank assets... the proposed regulatory changes would absolve banks of having to reserve capital against these non risk assets... it might be $300b... which would become excess capital if the reforms go thru...
ReplyDeleteTotal earnings of the entire SP 500 in a year are like 1T ... so almost 1/3 of an entire year of corporate earnings ... the $27 b here in the article would be chump change...
This comment has been removed by the author.
ReplyDeleteThe problem with the banks is SHAM liabilities wrt to the non-bank private sector. This will be 100% evident if cash is ever abolished since it will then be impossible for the non-bank private sector to redeem bank liabilities (which are, of course, for fiat) into a usable form (i.e. physical fiat, aka "cash") or into a usable account*.
ReplyDelete*Fiat savings accounts (e.g. US Treasury Direct) without checking and debit services do not constitute usable accounts.
And then there's outright subsidies for the banks in the form of interest on reserves (IOR) and positive yields on other inherently risk-free sovereign debt.
ReplyDeleteSo sham liabilities and welfare proportional to account balance and people think regulation is the solution?!
So how does one regulate systematic theft and oppression without becoming complicit in those things?
IOR is part of their "monetary policy" so if you want to get rid of that you have to expose monetarism first...
ReplyDelete